Austin is a tech hot spot. It wasn't always this way.

Sebastian Herrera @SebasAHerrera

Friday

Oct 12, 2018 at 10:27 AMOct 17, 2018 at 5:33 PM

Just a few months ago, another tech titan opened a state-of-the-art corporate campus near downtown Austin. Its gleaming new offices boast an on-site cafe, training center, game rooms and a sports field. Outside of the more than 500,000-square-foot facility, Oracle’s bold, red logo hangs, towering above the lakefront property along East Riverside Drive.

It is yet more evidence of the technopolis Austin has become.

Household brand names have eagerly invested in the city. Facebook, Google and even the U.S. Army have opened or expanded recently in the downtown area, in addition to Oracle. Elsewhere in Austin, Dell Technologies, Samsung, Apple, Amazon and others have done the same.

Tech-related economic development is now routine here. Last year, pharmaceutical titan Merck announced plans to create a major technology innovation center in Austin. In January, Amazon listed the Austin metro area among 20 finalists for its planned second headquarters. And only weeks ago, the Army opened its first high-tech center at the University of Texas System building.

But it wasn’t always this way -- not even close, said longtime Austin lawyer and business leader Pike Powers, one of the key players in the growth of Austin's technology sector.

Powers -- who spent seven years in the Texas Legislature -- was once chief of staff for former Texas Gov. Mark White when he helped lead Austin's bid to win one of its most significant technology victories: Landing the Microelectronics and Computer Technology Corp., the nation’s first for-profit computer industry research and development consortium. The MCC, as it was known, was created to share the resources of top U.S. tech companies, to then produce new technologies that member companies could use in making their own products.

It was 1983 when the city won the project. Austin was still a sleepy college town then, known mainly for its flagship university and massive Capitol building.

Becoming home to the MCC changed all that.

The MCC didn't create Austin's tech sector, which had arrived 16 years earlier when IBM planted some of the first technology roots in Austin by opening up a plant north of the city, and later when Dell Technologies was born in the 1980s and grew independently of MCC's presence. But MCC's arrival gave Austin new standing in the U.S. technology community. The facility was one of the first manifestations of the technology hub Austin would become.

"The MCC was an inflection point for Austin's evolution," said David Gibson, a senior research scientist at the University of Texas' IC² Institute and co-author of “R&D Collaboration on Trial,” a book about the MCC. "People on the West and East Coasts didn't think of Austin too much before it won the MCC. All of a sudden, people were saying, ‘what's happening here?’”

Laura Eldredge, a UT student and University System research analyst at the time, remembers the anticipation those at the system’s office felt when Austin won the competition.

Landing the MCC "planted a flag in Austin and Texas as a technology center,” said Eldredge, 61. “It felt like a new era was opening up right before me.”

Fighting for the MCC

The MCC was born more out of fear than necessity. Japanese electronics companies had joined to create their own computer research and development consortium, and in doing so threatened the grip U.S. companies had over the industry.

On April 5, 1983 -- about four months after the MCC was founded by leading electronics and computer companies -- retired Navy Adm. Bobby Inman, CEO of the MCC, called White to inform him that Austin was among four finalists to become the permanent home for the facility, competing with San Diego, Atlanta and North Carolina's Research Triangle.

A total of 57 cities had bid for the project, which boasted Advanced Micro Devices, Motorola, National Semiconductor and Control Data Corporation on its initial corporate roster. Hewlett-Packard, Boeing and 3M were among the heavyweights that later joined.

Inman told White that the strong reputation of UT, coupled with the state’s favorable business environment, propelled the city onto the finalist list.

After receiving the call, White moved quickly, accelerating task forces that had been created to refine a final pitch for the project.

Many meetings were led by Powers and representatives of UT, Texas A&M University, the city’s chamber of commerce and other interested civic leaders.

“We really didn’t know much about what we were doing when we started,” said Powers, 77. “Nobody had ever done a competition like this before.”

The group, which often met at the downtown office of Neal Spelce, a longtime television anchor who also ran a communications firm, discussed everything from financial incentives the city could offer to the MCC, to where the consortium's physical building could go within Austin.

Powers and his team eventually opted to make the city’s final on-site pitch at the atrium of the Lyndon B. Johnson Presidential Library on the UT campus.

“The writing of the presentation went down to the absolute last day before” the official pitch, said Howard Falkenberg, 75, a communications consultant who worked with Spelce at the time. "The presentation was very thoughtful of key elements that solved problems or provided opportunities to the MCC team."

'Spirit of collaboration'

At Austin’s presentation to MCC leaders in 1983, Inman was served quail for breakfast and then took a seat in the packed atrium along with representatives from state government, UT, Texas A&M, the chamber and even San Antonio civic leaders.

In their pitch, White’s team outlined a deal that would provide a building for the MCC -- which in the years since the consortium closed has became part of UT’s J.J. Pickle Research Campus north of the university. The team discussed state business policies and gave the MCC selection team stacks of information regarding Austin’s attributes, as well as a quality-of-life poll it had conducted.

The tipping point for the MCC group, according to those present, was how involved the state had been in trying to lure the project to Austin, in addition to the degree to which Powers’ group had tailored its presentation to fit the MCC’s needs.

Inman’s familiarity with UT also helped. He graduated from the university and has since served in several prominent roles there -- including as interim dean of the LBJ School of Public Affairs.

“When the MCC came here, they saw a spirit of collaboration and cooperation that they didn’t see (elsewhere),” said Gibson, the MCC book co-author.

In the end, though, it was the incentives that sold Inman. Like Amazon -- which has said from the start that incentives will weigh heavily on its second headquarters decision -- a financial commitment to the MCC was crucial, said Inman, 87.

Although the MCC’s operations were paid for by its member companies, UT leased the land for the facility at $1 per year for 10 years, in addition to providing $5 million to help with building costs. The university also endowed engineering and computer science positions worth $15 million, and provided $9.5 million for student research equipment, graduate fellowships and faculty jobs, among other financial aid.

'A technology center'

The pillars of Austin’s tech scene are often described as early investors such as IBM and Motorola, not to mention the metro area’s luck that Michael Dell studied at UT and opted to grow his namesake company here.

As for the MCC, it never became known as the springboard for an iconic Austin company or high-profile entrepreneur.

But those involved with the facility’s operations contend its legacy isn’t dependent on such things.

The MCC became an important advertisement for Austin’s research capabilities, and its presence helped boost UT’s engineering and computer science programs nationally.

In the years after winning the competition, Austin landed the Sematech consortium in 1988, the Applied Materials manufacturing center in 1991 and Samsung’s first chip manufacturing center in 1996.

“The MCC started a new way of thinking in American industries to work together," Gibson said, "There was also a major shift in 1983 about putting quality of life at the top” of what companies sought in a location.

“Why is the Army's (high-tech center) here, for example?” Gibson said. “Because it's a place where people like to live."

After Inman’s team selected Austin, the admiral was often asked to explain the choice. Economic leaders, journalists, education professionals and elected officials wanted to know why Austin, out of all places, had been chosen.

Time after time, Inman’s answers hit the same theme.

He explained the incentives Austin offered, the university resources it touted and other individual factors. But then he summarized the rationale in a single word.

“They were competitive,” Inman said of Austin. “It is still competitive.”

Editor's note: An earlier version of this story gave an incorrect date for the founding of the Sematech consortium. The consortium was founded in 1988, not 1998.

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